For security reasons, Grayscale refuses to give on-chain backup data.

The business claimed that Coinbase's custody service houses all of the bitcoins that support its financial products, but it withheld the wallet addresses.Grayscale went on to state that although “fear induced by others is not a good enough justification to break complicated security systems that have kept our clients' monies secure for years,” the prior point in particular “would be a letdown to some.”

Grayscale has chosen to undertake this action in reaction to the increasing pressure being put on the cryptocurrency market to adopt proof of reserves following FTX's prolonged liquidity issues and eventual collapse.

Grayscale said that its decision to withhold its wallet addresses was motivated by safety concerns, although other Twitter users disagreed with this assertion. Even though intruders have access to and are more interested in Satoshi Nakamoto's addresses, according to one user, “Satoshi's Bitcoin remains secure.”

Alesia Haas, the CFO of Coinbase, and Aaron Schnarch, the CEO of Coinbase Custodial, co-signed a letter that Grayscale circulated. Each item has its “own on-chain addresses,” and the cryptocurrency permanently pertains “to the applicable Grayscale product,” according to a statement that outlined Grayscale's ownership based on its trading offerings and reiterated that the assets “are secure.”

The Grayscale Bitcoin Trust (GBTC), a security that tracks the price of Bitcoin, is the firm's most well-known product, but it also sells securities that track the prices of other cryptocurrencies like Ether and Solana. Genesis Global, which supplies GBTC with liquidity, declared on November 16 that transactions had been suspended and cited “extraordinary market turbulence” as the cause. Massive withdrawals from its marketplace as a result of this “extraordinary market upheaval” surpassed its available liquidity. Investors are worried as a result of this.

The holding company of Genesis, Digital Currency Group (DCG), a venture capital business that specializes in cryptocurrencies, also owns Grayscale.

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